Thursday, March 29, 2007

Now that the brutal winter weather has finally passed, I made the mistake the other week of – well, the fates must have considered it crowing on my part – that, in twelve years, the NYU Tax Policy Colloquium has never once lost a session due to speaker unavailability. The obvious threat being that winter storms would prevent someone from coming in. (We meet from January through April.) We have had some close calls, and quite a few storms would have canceled us if they had come on the wrong day of the week (or if we’d had an out of town speaker in a given week), but never once a cancellation.

Sure enough, no sooner did I laud this fact then something happened. Our scheduled speaker this week was Kirk Stark of UCLA Law School, with a very interesting paper (if still in preliminary form) on fiscal equalization, or national programs transferring resources from rich states to poor states. He says that nearly all federations in the world other than the U.S. have such a program, and the U.S. at least formally doesn’t. (Which is not to deny that we might have the effective equivalent via differently labeled programs.) To see the paper, check out the March 29 date here.

Anyway, on Tuesday night Kirk contacted me to say that he unfortunately couldn’t come because he has the flu. One can certainly sympathize. I am just getting over a horrendous cold, which I would assume was rather like what he had only minus the fever, and even in my state I wouldn’t have wanted to board a transcontinental flight. With a fever it would have been unthinkable.

My first thought was that we would have to cancel today’s session. But then it occurred to me (with the help of my co-convenor, Alan Auerbach) that we could go on anyway. The NYU colloquium has an unusual format, in which the author doesn’t actually present the paper. Instead, we do and the author responds to our critiques of various issues. So one could say (it was the obvious joke that several people independently thought of) that this is simply the perfection or logical culmination of our method – no author whatsoever.

Not true, of course, and we would rather have had Kirk here. But with the help of several special commentators I enlisted to ensure multiple perspectives (Rosanne Altshuler, Jack Mintz, and Brian Galle), we actually had a pretty good session. Hence (counting Alan and me) the five commentators not in search of an author, from my title for this posting.

Bottom line conclusion of the session, without Kirk there to defend his view: to start with a bit of background, the paper proposes fiscal equalization based on tax capacity (i.e., potential revenue at a given level of “effort”) to respond to a fiscal federalism problem of inducing migration from poor to rich jurisdictions if public goods are like lump sum grants in their incidence but are financed by means-based taxes. This is merely a subset of the general fiscal federalism case for keeping redistribution to the highest level of government and having lower levels stick to providing competitive tax-benefit packages, with user fee style financing, a la the Tiebout model (named for Charles Tiebout’s famous 1956 paper).

We were unpersuaded that the paper’s proposed cure, payments to poor states (effectively financed by rich states) that seek to equalize taxing capacity fit logically with the diagnosis. Migration depends on fiscal effort, not fiscal capacity. (People move to Greenwich, CT, if the paper’s analysis is right, to get nice parks that richer people pay for, based on what Greenwich does, not what it could do.) And we thought the case is much stronger for equalizing, say, education outlays (where there is a positive externality plus an agency cost problem if parents don’t fully represent the interests of their children) than for government-provided consumer goods generally.

The paper offers an intriguing if preliminary political analysis, suggesting we don’t have fiscal equalization in the U.S. because (a) Blue States don’t want it since it transfers $$ to Red States, and (b) Red States don’t want it because their elites are anti-government and don’t want $$ given to their poorer citizens. But it’s hard to see why unrestricted cash grants to their governments wouldn’t appeal to Red State elites. Why not take free money? Better explanations, we thought, involved (a) path dependence – the U.S. started from a more decentralized status & so the thing would have had to be affirmatively introduced, plus (b) those who might have wanted it had more direct and appealing routes to getting the same thing (e.g., farm subsidies instead of $$ that depend on a complicated fiscal formula that could go the other way next year). Even the claim that we don’t currently have it, while other federations do, might conceivably be truer in form than in substance.

Anyway, not to tempt the fates yet again, but we still haven't lost a session due to speaker unavailability.

Monday, March 26, 2007

One of the interesting threads in the attorney scandal is that White House officials did lots of their communicating via Republican National Committee e-mails rather than White House e-mails. E.g., there is a report that Rove does 95% of his e-mailing via the RNC address.

Trivial though this may sound, there is also reason to believe that a lot of this has been done deliberately to evade legal requirements pertaining to recording and retention of official communications.

How does this play into the executive privilege claims? The natural analogy is attorney-client privilege, which is easily blown by the parties who want to claim it in various circumstances where they failed to treat a communication as confidential and as within the attorney-client relationship. Plus, there is no privilege where the attorney is providing not legal advice but something else (e.g., investment or tax accounting advice). It's a truism among knowledgeable practitioners that far less is actually covered by the privilege than lawyers tend to think while they are going about their daily business.

Obviously, there is next to no legal precedent on the boundaries of executive privilege, compared to the centuries of cases et al regarding the attorney-client privilege. But the privileges are similarly motivated cousins, and analogies from the latter are by no means irrelevant to thinking about the former. And if you think there's a special public purpose to letting the president get confidential advice, there's also a special public purpose to preventing him from evading oversight.

The easy and obvious point is that anything Rove sent out in an e-mail from his RNC address is not privileged. Call it a foot fault, if you like, but that's just tough, and doesn't call for sympathy given his likely unclean hands in using the RNC address.

A further interesting question is the extent to which using RNC e-mails to communicate stuff about meetings with Bush et al should be viewed as a further waiver of other executive privilege claims, at the limit on everything pertaining to the meetings and topics discussed in the RNC e-mails. On this point I would have to defer to those more knowledgeable than I am about how the attorney-client privilege is interpreted and applied.

But it strikes me as possible that we have an argument for a total waiver situation, even leaving aside the point that the attorney-client privilege does not cover criminal activity (relevant here given the strong inference of obstruction of justice as the cornerstone of the entire caper).

I certainly hope these arguments will be fully raised and vetted both in public debate and in any litigation on Bush's privilege claims.

Sunday, March 25, 2007

One Sunday when I was uncharacteristically free to wander around a Barnes & Noble (actual not virtual), I spotted a very interesting fiction series, "Femmes Fatales," published by the Feminist Press at the City University of New York. The series consists of selected pulp or genre novels written by female authors in the 1930s through the 1950s. So far I've read two, both of which were made into famous (but much less interesting) movies: Dorothy Hughes' "In a Lonely Place" and Vera Caspary's "Laura." Both are among the best detective/mystery/murder genre fiction that I've ever read; usually I find the genre tolerable but boring.

Give the Feminist Press credit, even if their forewords and afterwords are a bit predictable in exactly the academic vein would expect. The female writer's perspective in these two novels genuinely makes them much more interesting than they would otherwise be. (Plus, these appear to be particularly inspired outings by generally capable writers.) "In a Lonely Place" is far darker than the Humphrey Bogart movie - narrated by a male serial killer of women but not the misogynistic genre exercise one would expect from that. Also one of the best uses I can remember of the unreliable narrator device. "Laura" is less extreme, but also much fuller than the admittedly atmospherically effective Preminger film. Good use of multiple narrators, interesting twists even if one knows them from the movie. Laura is a single woman pursuing a career, not getting married as soon as she is supposed to, and surrounded by manipulative, immature men. The murder plot is a device (although a very good one) rather than the subject of real interest, notwithstanding the twists and suspense.

I like to vary my reading, so at the moment I'm embarked on the Rory Stewart book about walking through Afghanistan, but I will probably return to this series soon.

Tuesday, March 20, 2007

It's the old Watergate playbook. Bush's response leaves little doubt in my mind that he was personally involved in obstructing justice, both negatively by shutting down the Lam investigation and positively by seeking unfounded indictments of Democrats on sham charges.

Sunday, March 18, 2007

Yesterday Buddy ambled into the dining room with a gray object in his mouth that, upon inspection, proved to be a live mouse rather than an inanimate cat toy. With a little encouragement, he agreed to carry it back into a small, unoccupied bedroom for further proceedings.

Buddy and Shadow then caucused with the poor creature for a couple of hours. It spent a lot of time in their mouths, but they would drop it every now and then, only to swat at it and pick it up again as soon as it showed signs of life. Pretty much like tag team wrestling, only it didn't have a teammate. Poor thing must have thought it was at Guantanamo or something, and I felt quite sorry for it though agreeing that its life should be forfeit under the circumstances.

They eventually lost interest when it stopped moving for good. At this point I deposited it in the trash outside. Unclear whether an autopsy would have identified shock, internal bleeding, or heart attack as the cause of death. But the grand jury would have had a clear basis to indict for first degree murder.

Buddy and Shadow then headed to their food bowls for refreshment (they had no interest in eating the mouse), and remained too stirred up to nap for a couple of hours.

Two movies I always think about when I observe this type of activity are (1) The Incredible Shrinking Man (Grade B 1950s sci fi in which a man, hiding in his daughter's dollhouse, is attacked by his cat once he has shrunk to being a few inches tall), and (2) the Nightmare on Elm Street [CORRECTION - thanks to a reader!] movies. Freddy Krueger is rather cat-like, from a mouse's perspective, what with his playfulness and retractable razor blades on his fingers.

Later on, Buddy was purring, kneading with his paws, and rolling over as I thanked him for the trouble-free vermin removal. As they say in the NBA, you can't teach size.

Thursday, March 15, 2007

Today I was in Philadelphia, at Penn Law School, presenting my paper "Beyond the Pro-Consumption Tax Consensus." One anthropological question I got, from an economist in attendance, is why law profs' papers often over-claim, e.g., by generalizing a particular economic model with restrictive assumptions to serve as a source of very broadly stated real world conclusions. (I should note that this is what I was critiquing in my paper, not exemplifying; the question in a sense was why my paper needed to be written.)

I think it's partly from the nature of law review publication, where you need to make big claims in order for student editors to figure they should publish it. A second cause is the enthusiasm of the convert, where law profs are coming into another discipline in order to make use of it. A third is that simply using a given economic model, even if one over-claims from it, can represent an advance if people in law were unaware of it.

In conversation at dinner following the dinner, I emphasized the law review element, but with an internal feeling that I was indeed over-claiming for this explanation. As I was rightly asked, aren't people calculating past publication to their peer readers. (And I noted in an earlier post the strategy I've heard about whereby you over-claim so the law review will accept your piece and then take out the offending language once you're in the door.)

Upon reflection, there's also something distinct in law school academic culture (possibly derived in part from the law review editing experience, which so many law profs had) that applies to judgments by one's peers, as opposed to student editors. This is the paradigm of shifting the paradigm, often in Yale Law School type form to trumpet a cute little syllogism as a universal precept in lieu of more serious and careful analysis.

I remember in my days on the University of Chicago Law School faculty, when lateral hiring prospects were up for consideration, when the question would be asked of someone who evidently had done good work: "Yes, but has he/she shifted the paradigm for anything?"

At which point I would always think: "Fine, but what if the previous paradigms were just as good or better?"

Wednesday, March 07, 2007

I'm bemused by all the sympathy for Lewis Libby now that he has been convicted. One actually should feel some measure of sympathy for him, and indeed for all convicted criminals, even murderers, if the consequences of the verdict will cause them to suffer, even deservedly. (As Libby no doubt will, at least psychically, if he goes to prison, even if it's relatively soft time.) Sympathy for human pain should be universal, whether or not one always acts on it.

The sympathy for Libby appears to be comparative, however, as if he, compared to other convicted felons, especially deserves a break. This view I cannot share.

The perjury and obstruction here were part of a conspiracy by a cabal to take the United States to war on false pretenses, and meanwhile to bully and besmirch all whistle-blowers and critics. It was part and parcel of the most gratuitous foreign policy disaster in U.S. history. (Vietnam, by contrast, was more or less bound to happen given the broader public mindset at the time, although it's true that the Gulf of Tonkin episode has elements in common with all this.) The harm these people have done is incalculable. And the conspirators, while hyping phony evidence about WMD, were prepared to undermine actual U.S. intelligence about WMD around the world by outing an important CIA specialist on this topic.

Readers may recall that I posted this article here. I have since rewritten it to make it, I hope, a lot more accessible and reader-friendly, as well as to make some of the conclusions a bit crisper and more general.

The piece has now been accepted by the Stanford Law Review. Joe Bankman will be writing a brief reply, reflecting that my article is in part a critique or response to his article in Stanford (co-authored by David Weisbach), entitled "The Superiority of an Ideal Consumption Tax Over an Ideal Income Tax."

My personal feeling is that the Bankman-Weisbach article significantly advanced the legal tax policy literature and that mine does as well.

Raves keep appearing everywhere I turn for the new Arcade Fire album, which made both the NY Times Magazine and the front page of its Sunday Arts & Leisure section.

But I keep seeing the word "bombastic" here and there in references to the album, along with half-apologetic, half-aggressive comments that, well, if you're too set on irony and too unsympathetic to Springsteen-style sentiment-blasting it might not be for you.

I certainly don't think my own palette or palate is limited to irony, although it's a coloring or flavor that I like. The Wrens' Meadowlands, my favorite album of the last few years, certainly emphasizes feeling rather than irony. But I found the first Arcade Fire album simply too bombastic and a bit over-wrought; hence, I think I will sit this one out.

Tuesday, March 06, 2007

The other day, I came down to make breakfast and found 2 chewed-up pieces of steak lying on the ground. These were leftovers from my kids' dinner the night before, and I was quite sure I had left them in the garbage can with the lid closed, but life is busy and you just go on.

I also knew the most likely culprit - Shadow, aka the Big Fella (an honorific title; he's only 10 pounds). Normally the best-behaved of beasts, he is a bit gaga when it comes to cooked meats. I figured that perhaps the lid of the garbage can hadn't been shut.

Tonight I was removing meat from its packaging, in the course of making something for dinner, and Shadow walked up to the garbage can, pushed the lid up, and shoved his head inside. Case closed, so far as the other night is concerned. Of course, before we laud his intellect too much for figuring out how to get into the trash, we should keep in mind that there was no meat in there yet, and that I was right next to him watching. So he can forget about future opportunities to extract meat from the garbage overnight.

Still, impressive in its own way.

Oh, yes. Shadow is toothless by this stage in his career (he is going on 16 years old). I'm not sure what good any of this did him anyway.

Saturday, March 03, 2007

I've been greatly enjoying selected tracks from Andy Partridge's Fuzzy Warbles, volumes 7-8, available on ITunes so one can select judiciously. Partridge, the main figure in the apparently now-defunct XTC, has issued eight volumes of outtakes and home recordings (9 if you buy the entire package & get a bonus CD), many of which are either casual maunderings or demos of songs that sound better in the XTC released catalog. But if you use the 30-second sample feature on ITunes plus the customer reviews on ITunes and Amazon, you can figure out which ones are worth having.

One way of describing the good songs (and I gleaned 90-100 very good minutes out of the 8 Fuzzy Warbles volumes) is that it sounds like what Paul McCartney might have been doing over the last decade if he had kept his talent and not become so self-conscious and pompously silly.

About Me

I am the Wayne Perry Professor of Taxation at New York University Law School. My research mainly emphasizes tax policy, government transfers, budgetary measures, social insurance, and entitlements reform. My most recent books are (1) Decoding the U.S. Corporate Tax (2009) and (2) Taxes, Spending, and the U.S. Government's March Toward Bankruptcy (2006). My other books include Do Deficits Matter? (1997), When Rules Change: An Economic and Political Analysis of Transition Relief and Retroactivity (2000), Making Sense of Social Security Reform (2000), Who Should Pay for Medicare? (2004), Taxes, Spending, and the U.S. Government's March Towards Bankruptcy (2006), Decoding the U.S. Corporate Tax (2009), and Fixing the U.S. International Tax Rules (forthcoming). I am also the author of a novel, Getting It. I am married with two children (boys aged 16 and 19) as well as four (!) cats. For my wife Pat's quilting blog, see Patwig’s Blog.